Pate v. Preferred Contractors Insurance Company Risk Retention Group LLC
| Jeanette Pate |
| Preferred Contractors Insurance Company Risk Retention Group LLC |
| 4:2021cv03654 |
| November 6, 2021 |
| US District Court for the District of South Carolina |
| R Bryan Harwell |
| Insurance |
| 28 U.S.C. ยง 1332 |
| Plaintiff |
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Filing 9
TEXT ORDER denying #6 Motion to Dismiss: Plaintiff filed this diversity action in state court, and Defendant removed it here and filed the instant motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). Plaintiff filed a response in opposition to the motion, and Defendant filed a reply.To survive a Rule 12(b)(6) motion, the complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Fairfax v. CBS Corp., 2 F.4th 286, 291 (4th Cir. 2021) (quotation marks omitted) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court will "consider as true all well-pleaded allegations in the complaint, matters of public record, and documents attached to the motion to dismiss that are integral to the complaint and of unquestioned authenticity." Woods v. City of Greensboro, 855 F.3d 639, 642 (4th Cir. 2017). In her complaint, Plaintiff alleges that she is the assignee of Smith's Construction Company ("Smith") for any causes of action Smith may have against Defendant; that Defendant issued Smith a commercial general liability insurance policy effective from January 28, 2020, to January 28, 2021, during which time Smith engaged in work at Plaintiff's home "that resulted in... multiple occurrences of bodily injury and/or property damage covered under the Policy"; that she sued Smith in state court on January 19, 2021, and her attorney informed Defendant's adjuster of the suit on May 31, 2021; that Defendant failed to defend Smith; that she obtained a $1,050,703 default judgment against Smith on August 31, 2021; and that Defendant refuses to indemnify Smith. ECF No. 1-2 at pp. 2-4. Plaintiff asserts five causes of action: negligence/gross negligence/recklessness, bad faith, breach of contract, declaratory judgment, and reformation. Id. at pp. 4-7. In its motion to dismiss, Defendant contends Plaintiff fails to state a claim because: "By its very specific terms and conditions, the Policy does not provide coverage for Smith. Rather, the Policy is a claims made and reported policy as opposed to an occurrence based policy, and there is no allegation Smith satisfied the requirements in the policy as a claims made and reported policy. Further, the Policy is unambiguous." ECF No. 6-1 at p. 5. See generally Gateway Residences at Exch., LLC v. Illinois Union Ins. Co., 917 F.3d 269, 274-75 (4th Cir. 2019) (detailing the nature of a claims-made-and-reported policy). Defendant attaches several documents to the motion, including the purported insurance policy and a cancellation notice. ECF Nos. 6-4 & 6-5. The Court will deny Defendant's motion for several reasons. First, Plaintiff appears to question the authenticity of the Policy attached to Defendant's motion. ECF No. #7 at p. 1 n.1 ("There is no proof Defendant's Exhibit C is a complete and authentic copy of The Policy."); see Zak v. Chelsea Therapeutics Int'l, Ltd., 780 F.3d 597, 606-07 (4th Cir. 2015) ("Consideration of a document attached to a motion to dismiss ordinarily is permitted... when the plaintiffs do not challenge the document's authenticity." (cleaned up)); cf., e.g., Hendrix Ins. Agency, Inc. v. Cont'l Cas. Co., No. 7:10-cv-02141-HMH, 2010 WL 4608769, at *4-5 (D.S.C. Nov. 3, 2010) (disregarding a policy attached to a Rule 12(b)(6) motion to dismiss). Second, Defendant asserts the policy was canceled on April 17, 2020, see ECF No. 6-1 at pp. 5, 10, but the cancellation notice provided by Defendant lists a different policy number and a different cancellation date (March 9, 2019). See ECF No. 6-5. The Court must adhere to the Rule 12(b)(6) standard and therefore cannot consider the cancellation notice. Third, Defendant does not address the individual elements of Plaintiff's substantive causes of action, namely her negligence, breach of contract, and bad faith claims. See generally Fuller v. E. Fire & Cas. Ins. Co., 124 S.E.2d 602, 610 (S.C. 1962) (elements of a breach of contract claim); Crossley v. State Farm Mut. Auto. Ins. Co., 415 S.E.2d 393, 39697 (S.C. 1992) (bad faith); Charleston Dry Cleaners & Laundry, Inc. v. Zurich Am. Ins. Co., 586 S.E.2d 586, 588 (S.C. 2003) (negligence). Fourth, the parties rely heavily on cases decided at the summary judgment stage. Finally, and most significantly, the parties have not cited (and the Court has not located) any South Carolina authorities discussing the applicability of the notice-prejudice rule in the context of a claims-made-and-reported policy. While "the weight of authority [is] that the notice-prejudice rule does not apply to claims-made-and-reported policies," Oregon Sch. Activities Ass'n v. Nat'l Union Fire Ins. Co. of Pittsburgh, 279 F. App'x 494, 495 (9th Cir. 2008), the Court is reluctant to make a definitive ruling without further research and briefing. See, e.g., Wright v. North Carolina, 787 F.3d 256, 269 (4th Cir. 2015) (criticizing the district court for dismissing a state-law claim under Rule 12(b)(6) because the court's "failure to find state law support for dismissal at the Rule 12(b)(6) stage should have given the district court pause").While Defendant's arguments may be somewhat compelling, the Court believes they are more properly raised at the summary judgment stage. See generally Twombly, 550 U.S. at 556 ("[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely." (internal quotation marks omitted)). Accordingly, the Court DENIES Defendant's #6 motion to dismiss. Signed by Chief Judge R. Bryan Harwell on 1/3/2022.(eney, )
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| Filing 8 REPLY to Response to Motion re #6 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM Response filed by Preferred Contractors Insurance Company Risk Retention Group LLC. (Dedman, James) |
| Filing 7 RESPONSE in Opposition re #6 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM Response filed by Jeanette Pate.Reply to Response to Motion due by 11/29/2021 Add an additional 3 days only if served by mail or otherwise allowed under Fed. R. Civ. P. 6. (Attachments: #1 Exhibit A - affidavit)(Luck, Jason) |
| Filing 6 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM by Preferred Contractors Insurance Company Risk Retention Group LLC. Response to Motion due by 11/29/2021. Add an additional 3 days only if served by mail or otherwise allowed under Fed. R. Civ. P. 6 or Fed. R. Crim. P. 45. (Attachments: #1 Memo in Support, #2 Exhibit A - Underlying State Court Complaint, #3 Exhibit B - Default Judgment in Underlying Case, #4 Exhibit C - Insurance Policy, #5 Exhibit D - Cancellation of Policy)No proposed order.(Dedman, James) (Attachment 5 replaced on 11/15/2021 with corrected document provided by filer) (hcic, ). |
| Filing 5 Local Rule 26.01 Answers to Interrogatories by Jeanette Pate.(Luck, Jason) |
| Filing 4 NOTICE of Appearance by Jason Scott Luck on behalf of Jeanette Pate (Luck, Jason) |
| Filing 3 Local Rule 26.01 Answers to Interrogatories by Preferred Contractors Insurance Company Risk Retention Group LLC.(hcic, ) |
| Filing 1 NOTICE OF REMOVAL from Marlboro County Court of Common Pleas, case number 2021-CP-34-00262 (filing fee $402 receipt number ASCDC-10172866), filed by Preferred Contractors Insurance Company Risk Retention Group LLC. (Attachments: #1 Exhibit A - State Court Service of Process, #2 Exhibit B - State Court Summons and Complaint, #3 Notice of Filing Notice of Removal, #4 Proposed Acknowledgment of State Court)(hcic, ) |
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| Plaintiff: Jeanette Pate | |
| Represented By: | Jason Scott Luck |
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| Defendant: Preferred Contractors Insurance Company Risk Retention Group LLC | |
| Represented By: | James Monroe Dedman, IV |
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